Editorial: China's leadership tries authoritarian economic reform

A just-concluded plenum of China’s Communist Party, widely expected to set the country’s economic course for the next few years, was notable for its opacity. In keeping with previous practice, not just the debates but even the location of the four-day meeting was secret. Chinese and foreign analysts eagerly anticipating news of future policies have been reduced to parsing the cryptic communique issued Tuesday.
Those who expect President Xi Jinping to lead a new wave of economic reform focused on a single sentence declaring that “the core issue is ... giving markets a decisive role in the allocation of resources while better applying the role of government.” Skeptics pointed to a lack of detail and to an endorsement of state-owned companies, which are a major obstacle to reform.
It may be that the plenum, like a famous 1978 session under former leader Deng Xiaopeng, will lead to the fundamental changes in China’s economy that both domestic and foreign experts believe are needed to prevent a collapse of the rapid growth of the past two decades. But so far the clearest conclusion that can be drawn is that Xi intends to avoid any significant change to the totalitarian political system, much less support the liberalization that might be expected to accompany a freer economy. As the U.S. political scientist and blogger Daniel W. Drezner observed, “The mother of all experiments in authoritarian capitalism is about to begin” in China. There are strong reasons to expect such an experiment to fail.
To be sure, some of the problems China’s economy now faces can be addressed by technocratic measures. Many experts expect the Xi regime to liberalize interest rates and, eventually, currency exchange rates. This could have the effects of reducing excessive lending for poor investments and of bolstering consumerism, two reforms that almost all economists agree are essential. A line in the plenum communique also encouraged hopes for a revamping of land ownership, which could encourage rural development and prevent abuses by local authorities.
But China doesn’t just need reformed financial markets or land laws. Xi also faces massive corruption, environmental degradation that threatens to overwhelm urban areas and a gap between rich and poor that dwarfs that of the United States. How to tackle those problems without giving greater voice to the emerging middle class and empowering the judicial system and the rule of law? Not just dissidents but also many Chinese intellectuals and policymakers have recognized that such change is essential to economic development and social peace in the future.
Xi nevertheless seems to be leading a march in the opposite direction. An extensive crackdown on dissent and free speech followed his rise to power a year ago. The plenum ratified the creation of a new national security council that will handle both domestic and foreign security matters and concentrate more power in his hands. The leadership’s calculation seems to be that social unrest and even peaceful dissent can and must be stifled while economic restructuring is underway. But the repression will breed only more discontent, while the absence of checks and balances will continue to hamstring the economy.
China would be more likely to prosper if its debates about its future emerged from their Stalinist secrecy to a democratic light of day.